Wall Street’s Disconnect with Main Street

Wall Street’s Disconnect with Main Street

“Nobody has ever taught you how to live out on the street
and now you're gonna have to get used to it.”

-Bob Dylan

I didn’t know if I agreed or disagreed with the initial $700 billion Wall Street bailout until Treasury Secretary Hank Paulson confirmed that he opposed capping pay for corporate executives.

Paulson said that it was “punitive” and would “discourage institutions from participating in the program.”

According to Hank, a corporate president would let a company go broke, its employees get fired and its investors lose all their money before the executive would give up their limousines, yachts and stock options.

The scary thing is that Paulson sincerely believed it. It was based on his knowledge of his fellow Wall Streeters.

Paulson is the Treasury Secretary. If his original proposal passed, Paulson would have been more powerful than the President of the United States.

And totally clueless.

If Paulson is so out of touch on executive pay, the rest of his program might be based on faulty data too. We went to war in Iraq based on faculty data. Just once, I would like for the government to do its homework first

Outside of Hank and his buddies on Wall Street, no one is in favor of perks for executives. It is an issue that might cause people to march in the streets.

Paulson seems disconnected from that fury. He is also disconnected from those who make their living on Main Street.

I’ve run a business all of my adult life, just like my dad did. My children run one now.

We all understand one principle. If we go broke, we go broke. I’ve never had a loan that I did not personally guarantee. If my businesses go down, they take everything.

My father lived to avoid the “take everything” moment. Just like I have. No matter how much money you have, a business owner never gets that “take everything” moment out of their minds. It is part of their psyche.

It’s obviously not part of the Wall Street psyche.

I’m not a typical Wall Street basher. I love capitalism. I’ve been involved in the financial business for 26 years and believe in the markets. I have many friends on “the street” and I feel for those losing their jobs.

I don’t feel for the top dogs leaving with millions.

The attitude that Paulson stated, that executive compensation is more important than the overall health of a company, is pervasive on Wall Street. It is a primary reason for the crisis.

Somewhere along the way, those companies forgot two things:

1. They are investing other people’s money.
2. Their stockholders trusted the company to make them money.

The people who run the Wall Street companies aren’t owners like those on Main Street. They work for thousands of stockholders.

The executive’s first responsibility should be their customers, stockholders and employees. The limo and yacht shouldn’t make the list.

If the big dogs on Wall Street had been owners, like us on Main Street, they would have watched their bottom lines a little harder. They might have kept an eye on investments and been more cautious.

They might have avoided the crisis.

Wall Street executives never feared the “take everything” moment. It wasn’t their money they were risking. The people at the top knew they could retire with millions.

They acted like they were at a casino where someone else was supplying the chips.

Now they want a new player in the game, the taxpayer.

The recently defunct companies had common bond, I never invested in them. I knew some top management and they came across as arrogant jerks. They treated me like a yokel from a small town.

Management arrogance the surest way to ruin a business. No matter how big or small. My dad used to say “for those who think they are smarter than the game, the game has a way of catching them”.

If the Wall Street leaders have any shot of turning their businesses around, someone needs to teach them how to live out on the street.

The way we on Main Street do.

You can read Don McNay’s award winning column at www.donmcnay.com or write to him at don@donmcnay.com McNay is the Treasurer for the National Society of Newspaper Columnists.

Johnny Hayes, Editor and Publisher, Tom Loftus

Dave Astor at Editor and Publisher Magazine did a terrific story about my column concerning the economic crisis that ran yesterday. I've gotten response to Dave's column from all over the United States.

Here is the link.

Editor and PublisherDave Astor's story about Don McNay column in Editor and Publisher

Editor & Publisher story




Tom Loftus
On a happy note, I want to congratulate Tom Loftus at the Courier Journal on winning the 2008 James Madison Award for Service to the First Amendment. A huge honor for a guy who deserves it. Tom is a "journalist's journalist." He has an incredible work ethic. A good man and great journalist. Loftus Wins Madison Award

On a sad note, I want to report two deaths.

Johnny Hayes
The first is my old friend Johnny Hayes. The enclosed obit calls him "a political giant" and that was an understatement. He was one of Al Gore's chief fundraisers and closest friends. We worked together (Johnny was the big boss and I was down the ladder) in Gore's 1988 campaign. Along with a long resume of accomplishments (you can read about them in the link) Johnny was a man you could trust and a great guy to be around. Devoted to his family. He called me once at midnight to find a dentist for his daughter. I found one.

Johnny was instrumental in launching the political careers of rising stars like George Phillips in Nashville and former Kentucky State Treasurer Jonathan Miller. One of his greatest protege's was Alex Haught, who was killed by a drunk driver.

I mention Johnny in a column I wrote about Alex. The column was rewritten and part of both of my books.

A drunk driver might have kept Al Gore from being President

Newspapers around the world have carried the news of Johnny's death. Although Johnny would have enjoyed that a French newspaper carried his obit, the one in the Nashville Post is the most comprehensive.

Nashville Post story about the death of Johnny Hayes

Freda Mings Baird

Another death that hit home was the death of Freda Baird this week. She is the mother of Richmond trial attorney David Baird, who has been my friend for over 30 years. David and his brother Randy, and their late father C.R., were fixtures at Eastern Kentucky University football games for 20 years. David's wife Connie and daughter Sarah are like an extended part of my family.

Sarah, who works for Lt. Governor Dan Mongardo while she attends Centre, has the honor of being my first Facebook friend.

A great family and a great loss. Mrs. Baird was an incredibly nice woman.

You can read more about Mrs. Baird in the Richmond Register obit. Freda Mings Baird

Don

History of Jim Bunning and Economic Crisis

I will be writing non stop as the crisis goes on. I've spent my life studying the issues being debated and want to have an impact on the outcome.

I'm available to any group that wants to have me speak or any media outlet looking for information, an interview or a soundbite.

You can call me at (859) 353-4598 (1-888 Mr. McNay) or email at don@donmcnay.com

I've did two interviews (Thursday and Sunday) with Joe Elliott on WHAS, an appearance on Comment on Kentucky with Ferrell Wellman and an excellent interview with Neil Middleton on Issues and Answers on WYMT in Hazard.

I'm including links to the video of Comment on Kentucky and Issues and Answers. The Issues interview was one of the best ones I have ever done. Neil was well prepared and asked great questions.

If you are not on Facebook, it is time to join my page and my fan page. I'm updating both with breaking news. I go there before I go to my web site or blog.

Don McNay on Issues and Answers with Neil Middleton

Don McNay, on Comment on Kentucky, with host Ferrell Wellman,Stephenie Steitzer, Frankfort reporter for The Courier-Journal; and Adam Walser from WHAS

Don
don@donmcnay.com



I was Bunning when Bunning wasn't cool
THIS IS THE ONLY TIME YOU WILL EVER SEE A BARBARA MANDRELL SONG IN ONE OF MY COLUMNS. I SUFFERED THROUGH HER CONCERT IN 1983 AND STILL HAVE NIGHTMARES.

This week, I saw an article in a large publication that noted Bunning's opposition to Bernanke. If you had been reading this column for the past couple years, you would have been way ahead of the curve. I've taken some heat from my fellow Democrats but I call the economic issues as I see them. Bunning has been the guy seeing them the best.

Read from oldest to newest and you can see how this crisis should never have happened.

All are on www.donmcnay.com. Search for Bunning's name on the page.

Bunning, The Lone Voice Against Bernanke, Feb 2008
Nice Guys Make Lousy Senators, August 2007
Birdbrain Bernanke September 2007
Save us from Ben Bernanke, June 2007
The People Really Calling The Shots, May 2006
Big Shot Bernanke, May 2006
Three Sure Bets to Save Employees Pensions, June 2005

Join My Facebook Fan Page.
Most of you know that I am an avid user of Facebook.

Now I have a Facebook fan page. It showcases my work and also allows me to post interesting things that don't show up in my column.

I can see where the Facebook page will eventually be a staple of my writing. If you want to be ahead of the curve, sign up now.

I'd love to have you join my page. Please go to to link below to sign up. If you are on Facebook, you can also search by typing in my name.

Don McNay's Facebook Fan Page

Video of Don McNay on Issues and Answers

http://www.wkyt.com/issuesandanswers

Don McNay and Neil Middleton talk about the economy in general and Kentucky economics in particular.

Don McNay on WYMT's Issues & Answers

Author and syndicated columnist Don McNay will be on Issues and Answers on WYMT television in Hazard at 7.pm on Monday, September 22.

Issues and Answers is one of Kentucky's most popular public affairs programs.

McNay is the Chairman of the Board for McNay Settlement Group. He is an award winning columnist and author of two books. www.donmcnay.com

Economic Upheaval Predicts an Obama Victory

THIS IS MY COLUMN THAT WILL RUN ON SUNDAY SEPTEMBER 21

Economic Upheaval Predicts an Obama Victory

By Don McNay
Richmond Register

Then you better start swimming
Or you'll sink like a stone
For the times they are a-changin

-Bob Dylan

Until last week, I thought John McCain had a chance to be President. I don’t now.

I’ve been watching political futures trading on www.intrade.com. I could see a situation where McCain could unite the coalition of states that George Bush carried in 2000 and 2004.

Then the financial markets went on another wild ride. The latest drama was the tipping point. People will want striking change.

There are two ways that crisis effects presidential politics. In times of war, voters stay with the incumbent party. In times of economic upheaval, people elect challengers.

Abraham Lincoln, Woodrow Wilson and Franklin Roosevelt won war time re-elections. Herbert Hoover and Jimmy Carter were thrown-out during hard economic times. George H.W. Bush went out in an economy less painful than now.

McCain is not responsible for the nation’s economic woes. He’s a member of the current president’s party and has been in Washington for a long time.

Normally, experience and incumbency are assets. Not this year. Every time the markets get out of whack, people start looking for someone to make them calm again.

The people in charge are not getting the job done. It’s time to try someone new.

After the latest financial tsunami, the economy will be the only issue. War, social issues and “lipstick on a pig” are going to be distant side shows.

It will take a few weeks for the effect to ripple down to Main Street. Like a near death collision, shock sets in the days after the accident.

The tremors are going to hit Main Street about the time Election Day rolls around. That is very bad for McCain.


People are paying more for gasoline than they ever dreamed they would. Food is more expensive, people are losing their houses and jobs are lost and outsourced.

Financial institutions that were supposed to give us guidance have given us garbage. Some historic giants have been destroyed by greed, hubris and big time arrogance.

What is going on can’t keep going. People are dying for change. Until the markets went crazy, I thought McCain might symbolize enough change to make people happy. I don’t think so now.

When Ronald Reagan defeated Jimmy Carter, he asked the question: Are you better off today than you were four years ago?

Obama can ask voters: are you better off today than you were four MONTHS ago?
Even four weeks ago look sunnier than now.

Although I always planned to vote for him, (I’ve only voted for one Republican presidential candidate in my life) I’ve been slow to warm up to Obama. I was for John Edwards, before I found out Edwards was a reckless liar. Edwards’s social agenda, with a touch of Mike Huckabee’s economic populism, was the candidate I was looking for.

The upheaval has increased my Obama enthusiasm.

There have been a lot of bad economic decisions. The War in Iraq diverted billions that we needed at home. Lobbyists pushed through legislation that hurts consumers. Warren Buffett, the richest man in America, thinks he should pay more in taxes and estate taxes than his personal secretary pays. He’s right.

President Bush appointed a Federal Reserve Chairman, Ben Bernanke, who doesn’t have the slightest idea what he is doing. Bernanke has turned a bad economy into a terrible one.

Government regulation of financial institutions is a joke. They only time regulators step up is to throw money at companies that are “too big to fail.” They should learn to stop disasters before they start.

Billions are wasted, bailing out companies who made stupid decisions. CEO’s are rewarded for their screw ups with million dollar bonuses.

If I make bad business decisions, I go to the poor house. If a Wall Street hot shot loses billions, we buy them a yacht on the way out.

I’d love for the government to throw me a few billion. Unlike the Wall Street types, my company has never failed.

Large companies, with long histories, have been brought to their knees by stupid decisions. I am not sure why it happened, but it happened.

The country will vote for the candidate that keeps it from happening again.

Which means the times will be a changing.

Don McNay is the Chairman of the Board for McNay Settlement Group. You can write to him at don@donmcnay.com or read his award winning column at www.donmcnay.com

Gambler's Guide to Presidential Elections

Gambler’s Guide to Presidential Elections.

“I got it. I got it. I got your number on the wall.”

-Tommy Tutone


2008 is a turning point in my life. I quit watching pundits and rarely look at political polls. I have the answers, long before political “experts” do.

I track who is betting on political races.

A futures trading website called www.intrade.com allows you to “buy” futures contracts on the outcome of the presidential race.

There is supposedly a difference between betting and buying futures contracts. I have no idea what it is. It looks like gambling to me.

I grew up around bookmakers and the people at www.intrade.com figured out how to make it legal.

I’ve followed www.intrade.com for the past year and found it to be amazingly accurate. Look at it and see.

By going to www.intrade.com you eliminate the television blowhards and avoid polls like the one that picked Obama to win the New Hampshire primary.

I have not sent www.intrade.com any money. I have no idea who is behind it or where they are. I don’t like to bet but want to know how other people are betting.

The political futures market is a great example of an economic theory called “the wisdom of crowds.” Following money movement is a great way to predict outcomes.

When many people put their money up, sentiment and emotion are minimized as factors.

The www.intrade.com numbers are an interesting mix. The bettors favor Brack Obama to win over John McCain, but if you look at the betting on a state by state basis, McCain has a slight lead in the electoral votes.

Al Gore will tell you that winning the popular vote doesn’t mean anything unless you get the electoral votes.

Looking at the state by state breakout, I’m stunned at how many states has already been “decided” one way or another.

If the odds are 90% in one candidate’s favor, 60 days out, they are normally going to win an individual state.

Barring something extremely weird, a vetted candidate is not going to screw it up.

According to the trading, most of us are sitting the 2008 election out. If you are an Obama supporter in Kentucky, the odds are 98% to 5% (there is a margin of error) against your candidate. If you are a McCain supporter in Maryland, you are also out of luck. Obama has 93% there.

Most of the states that were for Bush in 2004 have a 90% or better rating for McCain. The Kerry states are generally going for Obama.

Virginia, Nevada, Ohio, New Hampshire and Colorado are where the battle will be fought. Virginia, Nevada and Ohio have small leads for McCain and the other two slightly favor Obama.

All five states went for Bush against Gore and all but New Hampshire went for Bush against Kerry. If Obama is going to win, he needs to get all the states that Gore won in 2000 and add one.

Any one will do.

The good news is that we won’t care about Florida. The betting favors McCain by about 65%.

Every now and then, I fall into the trap of political gossip and I wonder where some people get their information. I read that some Democrats were worried about California. 93% of the bettors disagree with that concern.

I thought that Obama would have a hard time winning Pennsylvania because he struggled against Hillary Clinton. 74% of the futures traders think otherwise. Just last week, I argued that Pennsylvania was in play. The futures traders have smacked down that notion.

A prediction does not mean that results are locked in stone. Someone can screw up or have a scandal break.

I doubt that McCain or Obama have a girlfriend (or boyfriend) on the side. On the other hand, I never dreamed that John Edwards had a mistress.

If Edwards had still been a viable candidate, his bettors would have lost big time.

For every person that wins a bet, there is another person that loses. Just like an election.

With tools like www.intrade.com, we have a better idea as to will be victorious.

As the late Mayor Daley of Chicago would say, “don’t make no waves, don’t back no losers.”

Don McNay is the author of Son of a Son of a Gambler: Winners, Losers & What to Do When You Win the Lottery. You can write to him at don@donmcnay.com or read what he has written at www.donmcnay.com